Ivey v. Sanderson

COLLIER, C. J. The plaintiff in error, brought as-sumpsit in the Circuit court of Lowndes, against the defendant, as the indorser of a bond: In the declaration, it .was admitted, that no action had been prosecuted against the obligors, and by way of excuse, alleged that though diligent inquiry and. search was made for them, they could not be found, and their residence was unknown. The defendant pleaded non assumpsit, and three special pleas, on ah of which the plaintiff took issue, but which need not be particularly noticed, as-they present no question of law for our decision. On the trial, a bill of exceptions was sealed, from which it appears, that the obligors were men of wealth and punctuality, — that they resided in Pasquotank county, ííorth Carolina, of which plaintiff' was advised at the time he became the indorsee. And further, that they had never been in this State since that time. Upon these facts, the court charged the jury “ that before the plaintiff. could recover.of the indorser, it was necessary to prove, that he had either pursued the makers to insolvency, or that a demand and notice was necessary, and neither ap — 425 — pearing in proof, they must find for the defendant.” The jury having' returned á verdict for the defendant, and judgment being thereon rendered; the plaintiff has brought his case to this court for revision. It seems to have escaped the notice of the parties, that the excuse alleged in. the declaration for neglecting to collect the bond of the obligors, was not made out by proof, bat was most clearly disproved on the trial, but as it was not noticed at the argument, the view we shall take of the case,, relieves us from considering it here. The only question we propose to examine, is the correctness of the instructions given by the. judge of the Circuit court to the .jury. In order to its determination, it is proper to examine the statutes in regard to the as-signability of contracts, such as that brought to our -> view in the present case. . By the act of eighteen hun-. dred and twelve, “ concerning the assignment of bonds, notes, &c. and for other purposes;” it is enacted, that all bonds, obligations, bills single, promissory notes, and all other writings for the payment of money or any other thing, may be assigned by endorsement, &c. The as-signee is authorised to maintain any action thereon, which the assignor might have maintained previous to assignment, and the obligor or maker is allowed all payments, sets off, or discounts made, had, or possessed against his bond, &c. previous tp notice of assignment, in the same manner as if the obligee or payee had prosecuted an action instead of the assignee. And the same remedy is given to an indorsee against the indorser or . indorsers of, such paper as is allowed by law, in cases of ihlan’d bills of exchange. The act of eighteen hundred and twenty-eight, “defining the liability of indorsers, and for other purposes,” after reciting that'much injury has boon done to the-citizens of this State,-by moans of the uncertainty of the decisions of the courts in relation to the proper time at which indorsees of bills, notes, bonds, <fcc. shall make demand, of the makers or obligors of such paper, pro — 426 — ceeds to enact — That thereafter the remedy on bills of exchange, foreign and inland, and on promissory notes, payable in bank, shall be governed by the rules of the law merchant, as to days of grace, protest and notice. All other contracts in writing, for the'payment of money or property, or performance of any duty of whatever nature, are declared to be assignable as heretofore, and the same remedy is given to the assignee as the obligee or payee was entitled to. Provided, that suit be brought to the first court of the county having jurisdiction of the case, to which process can be made returnable against the maker or obligor; and,should the as-signee fail to bring suit within that time (without the consent of the assignor, to the delay) against the -obligor or maker, the assignor shall be discharged-.from all liability upon his indorsement. And it is further enacted, that notice of non-payment shall only be required on bills of exchange and notes payable in bank. Though the statute of eighteen hundred and twenty-eight does not expressly repeal all or any of the pre-ex-isting enactments upon the same subject, yet it operates as a repeal, by implication of- so much of the act of eighteen hundred and twelve, as prescribes the steps necessary to be taken by the holder of indorsed paper, in order to charge its indorsers. Instead'of making a demand of the 'maker or. obligor, and giving notice of nonpayment, “as in cases of inland bills of-exchange,” it requires that á recovery shall be sought of them by suit, prosecuted as soon as may be after the maturity of the ■ indorsed paper. If such suit shall prove unproductive, then the assignor may be proceeded against. The contract of the indorser is conditional, and is an undertaking to pay to the indorsee; upon thq performance of the conditions imposed by the statute. , ( . The court alluded to, by the act, in which the suit is to be brought, is understood to be some court of competent authority, exercising jurisdiction within the State. Such was the decision of this court in Woodcock vs. — 427 — Campbell.* In that case, the action was brought on a bond, payable “at the United States ■ Branch Bank at Nashville.” The plaintiff in error, (who was defendant below) was both the obligee and first indorser: the de-fence set up 'was, that no demand bf payment had been made at the bank, nor suit brought against the maker, as required before an indorser could be charged. But this defence was successfully countervailed in the Circuit court, by proving, that the maker had removed without the State, before the bond became due, and so continued up to the time of the trial. In ’this court, two points were mudé, — -first, that to fix the liability of the indor-ser. a demand at the bank was necessary — second, that the removal and continuance of the obligor without the State, dispensed with a performance of the condition required by the. act of ‘eighteen hundred and twenty-eight. The court say, it mar be conceded, that if the instrument sued on, was subject to be controlled by the rules of the law merchant, that a demand at the place appointed for its payment, would have been essential to charge the plaintiff in error, but the usages of that branch of the law were excluded in such a case, by the statute of eighteen hundred and twenty-eight, and the explanatory enactment of eighteen hundred and twenty-nine : And the act of eighteen hundred and thirty-t wo, which modified the law in that respect, being posterior- to the date of the bond, could not exert an influence upon the rights of the parties. In regard to the second question, the court considered, that had the obligor remained within the State, it would have been necessary to sue him. before proceeding against the assignor; but as this had been rendered impracticable by his withdrawal, without any fault in the indor-see, the contract of indorsement had become absolute by the impossibility of performing the condition annexed, — of suing in one of our own courts. — 428 — The first question does not arise in the case before us, and it remains to inquire, how far the second is applicable to the charge of the court, upon the facts disclosed in the bill of exceptions. By the third section of the act- of eighteen hundred and twenty-eight, it is provided, (as already shewn,) that- notice of non-payment shall only be required on bills of exchange and notes payable in bank. The paper on which the defendant is sued, does not come within that section; because no particular place is appointed on its face for itg -payment. Nor does it come within the j)roviso of the second section; because the obligors resided without the State, at the time of the indorsement, and have never been within the same since that period, so that no suit could have been brought against them in any one of oiir courts. The only provision of the statute, then, that can be applied, is so much of the second section ás directs that all contracts in writing (not specifically enumerated in the first section,) for the payment.of money or property, or performance of any duty, shall be assignable as theretofore, and the assignee shall maintain such action thereon, as the assignor could have done. The mode of assignment previously authorised, was under the act of eighteen hundred and twelve, and by indorsement. Thus it is shewn that the plaintiff acquired a legal ti-lle from the defendant, to the paper in suit- — that the statute gives him an action against the maker, but is silent as to any remedy against lire indorser; we will now inquire what are the rights of such an indorsee againsi, an indorser, and what steps he is to pursue, to make them available. Let it be premised, that there is no pretence that tire defendant practised a fraud upon the plaintiff, either in concealing truth, or suggesting falsehood; on the contrary, he advised him of the place of the obligors’ residence, .when he transferred to him their bond. The caséis, then, one of contract, unaffected 'by extraneous-circumstances. It has been seriously, questioned,- whether at common law, the mere indorsement of a note429 or bond, created a contract by tbe indorser to pay ,it, if the maker or obligor did not. The Supreme court of New Jersey, in Garretsie vs. Van Ness,* decided that an assignor (without fraud, deceit, express warranty, or special undertaking) of an instrument not negotiable by the law merchant, was not responsible to the as-signee, though the principal debtor proved insolvent.† But in Mackie's executor vs. Davis,‡ the Court of Appeals of Virginia, in construing a statute of that State, similar to that part of the act of eighteen hundred and twenty-eight, which applies to this case, held that the assignor of a bond is liable to the assignee, who having used due diligence to recover the money from the obli-gor, has failed to do so. And the Court of Appeals of Kentucky, in expounding an act of the Legislature of that Commonwealth, almost a literal copy of the Virginia law, re-aifirm the case of Mackie vs. Davis, —Smallwood vs. Woods,§ — and these cases have been followed by an unbroken current of confirmatory decisions in both States. It will be apparent from a comparison of the statute of eighteen hundred and twenty-eight, with the statutes of Virginia and Kentucky, and the decisions of their courts upon them, that our Legislature must have had in view the law in regard to the assignment of bonds, &c. as it was understood in those States. Under this impression, it is certainly proper to draw aid from these sources of information, to lead us to a- correct conclusion. We then think it is- competent for the as-signee of a bond, &c. situated as the plaintiff, to sue his assignor, if he has used due diligence to obtain payment from the obligor, &c. and has failed. If the assignor was insolvent, so that a suit would be unavailing, its prosecution might be dispensed with; but without this or some other reasonable excuse, it could not be preter-rnitted with safety. What would be due diligence in — 430 — such case, would of course be a question to be determined by the jury, under the instructions of the court, as to the law.* But we .consider it Clear, upon authority, that unless there was an effort to coerce payment from the obligor, &c.-or some satisfactory reason furnished for the neglect to make it, the assignor could not be charged. ■ . ■ . The present case is clearly distinguishable from that of Woodcock vs. Campbell. Here, (as has been already shewn) the plaintiff became the indorsee of paper, with the full knowledge that the obligors resided without the ¡State, and with distinct information of the place of their residence; so that the contract of the defendant could not have been made,, with a view to the diligence required of assignees, by the proviso of the second section of the act of eighteen hundred and twenty-eight. 'In the case cited, the obligor was living in the State at the time, of the assignment — the contract was clearly, made with a reference to our laws, and imposed upon the assignee the necessity of a suit against him. in order to charge his' 'assignor. But this condition became impossible to be performed by the removal of thó obli-gor beyond the limits of the State; an act to which the assignee had not contributed, and its performance being" placed beyond the power of the party on whom it was imposed without his default, the undertaking of the assignor was held to have become absolute. In Smallwood vs. Woods,† it'was determined under the . statute of Kentucky, that the assignee would be excused from, the employment of the compulsory process of the law against the obligor, if. he was out of the Commonwealth ; and- such absence was not contemplated by the parties at the time of the assignment — see also ' Oldham vs. Bengan;‡ Clay vs. Johnson.§ The case of Cavanauh vs. Tatum,ǁ which was cited by — 431 — the plaintiffs counsel, does not oppose the principles we have laid down — see also Roberts vs. Kilpatrick.* We are therefore of opinion, that for the failure of the plaintiff to use diligence to collect the bond of the obli-gors, or to prove their insolvency, the charge of the Circuit judge to the jury was correct, so far as it held the necessity of a suit against them; and the alternative of the charge being immaterial under the evidence in the cause, the judgment must be affirmed. Footnotes [*] 2 Porter’s R. 456. [*] 1 Penn. R. 20. [‡] 1 Wash. R. 219. [†] 1 Penn. R. 158. [§] 1 Bibb’s, R. 542 [*] 1 Wash. R. 219. [§] 6 Mon. 641. [†] 1 Bibb’s R. 542. [‡] 2 Litt. R. 134-5. [ǁ] 4 Stew. & Por. R. 204. [*] 5 Stew. & Por. R. 96..